Challenges in Ethanol Blending and Their Impact on India

We live in a world where climate crisis is inevitable and our dependence on traditional fuels is significant. The Indian government rolled out the Ethanol Blended Petrol (EBP) programme to combat this issue. Under this initiative, 10% ethanol is mixed with regular petrol and used as a sustainable alternative. As the concerned authorities aim to achieve the goal of 20% ethanol blended fuel by the end of 2025, the nation is simultaneously facing certain challenges to meet this future demand for biofuel. Let us try to understand the scenario in front of ethanol manufacturing companies in India, and observe its impact across the country. 

But, first things first…

What is Ethanol Blending?

It is a known fact that Ethanol is derived by processing by-products of sugar manufacturing. When it is blended with petrol, we call it ethanol blending. It has several benefits and no environmental damage tops the list. It also cuts down the cost of importing crude oil from oil-rich nations. 

Challenges in Ethanol Blending

Price Hike Demand 

Last year, the ethanol industry demanded a hike in the price of its end product. They cited the reason that additional investments require proper returns that work towards boosting the whole supply. Hence, the ethanol manufacturing industry in India demanded a rise in the price of ethanol derived from feedstock other than sugar molasses. Paying heed to these demands, the Indian government raised the purchase price of ethanol procured from rice and maize by 7% and 9% respectively.

State Government Constraints

The EBP programme was initially introduced in limited states and Union Territories to observe the acceptance rate of the fuel. Therefore, many states could not be a part of this initiative in the primary stage. These regions somewhat lost the opportunity to introduce their people to the benefits of renewable fuels like ethanol. The concerned authorities are further making provisions to ensure that this initiative reaches every corner of the nation.

Conclusion

When the Government of India introduced the EBP programme, it had different challenges. It includes 18% GST which was later brought down to 5% and restricting grain-based distilleries from participating in EBP, but now encouraging the same. The landscape of ethanol blending has changed to a great extent, giving high quality ethanol manufacturers many opportunities to grow today. But the industry still has a long way to reach its bright future and overcoming these challenges is key to that door.